Revised version -- done

Revised version -- done

Netherlands, RI like husband and wife: Frans Seda T. Sima Gunawan Contributor Jakarta

The relationship between the Netherlands and Indonesia is like the one between a husband and wife, "a love and hate relation," says senior economist and former economics minister Frans Seda.

The two countries have strong relations in various fields, from economics and politics to culture and education, but the fact that the Netherlands was the former ruler of Indonesia remains. As a result, this sometimes sparks bitter feelings among some Indonesians, especially some members of the older generation.

Having ruled some parts of what is today Indonesia for as long as 350 years, the Dutch, in a way, have some feelings of guilt and have been making great efforts to assist Indonesia, according to Seda, who served as economics minister during the time of former President Soeharto.

The Netherlands were evicted from Indonesia in 1942 and for the next three years Japan ruled the country until it was defeated in World War II, giving Indonesia the chance to declare its independence.

As a new country, however, Indonesia faced various problems, including an economic crisis that caused untold suffering among the people. Without the assistance of foreign countries, it would have been virtually impossible for the newly independent country to overcome its economic problems. In fact, as time went on the economy was getting worse.

"In 1965, inflation stood at 650 percent," Seda said, indicating the serious problems former president Soekarno faced during the later years of his administration.

The disastrous situation contributed to the fall of president Soekarno, who was then replaced by Soeharto and his New Order government.

As minister of economics, Seda was quick to take action so as to build up confidence in the international community and to save the country, whose foreign debt in 1967 was US$2.5 billion while per capita income was stood at a measly US$50.

At Seda's initiative, Indonesia's first donor group, the Intergovernmental Group on Indonesia (IGGI) was formed in 1967, with the Netherlands, France, the United Kingdom, the United States and Japan as its first members.

"Both the Netherlands and Japan showed an interest in lead the IGGI. I told the then Japanese Ambassador to Indonesia to let the Netherlands, which had ruled Indonesia longer than Japan did, to hold the chairmanship, and he didn't argue," Seda said.

Seda, now an economic advisor to President Megawati Soekarnoputri, told the IGGI members at that time that Indonesia was willing to pay its debts and would be able to do so if they helped by investing in Indonesia.

The strategy worked and in two years Indonesia had achieved economic stability. The inflation rate dropped sharply from 650 percent in 1965 to 2 percent five years later, while economic growth in early 1970s reached up to 7 percent.

The IGGI's membership continued to expand, eventually reaching 20 members, including some financial institutions like the World Bank and the International Monetary Fund (IMF).

As the IGGI leaders, the Dutch did their jobs very well. Dutch investment to Indonesia also continued to increase.

In 1973, the Dutch minister of economic cooperation, J Pronk, tried to include the issue of the Indonesian Communist Party (PKI) on the agenda of the IGGI, which was strongly rejected by Indonesia.

Some 20 years later on a visit to Indonesia, Pronk once again raised political issues, at which Soeharto took great umbrage. He then refused to accept any further financial aid from the Netherlands. This was one of the reasons that led to the dissolution of the donor group in 1992. The donor group was later replaced by the World Bank-led Consultative Group on Indonesia (CGI).

"But relations soon improved. The Netherlands has the moral obligation to help Indonesia, and Indonesia needs such support," said Seda, who studied economics in Tilburg from 1950 to 1955.

Even though the Netherlands is a small country, it has significant influence in Europe, and especially given that it is currently representing the presidency of the European Union here (Ireland actually holds the rotating EU presidency at the moment but due to the fact that it does not have an embassy here, the Dutch, who are next in line for the presidency, have taken over its duties in Indonesia).

Indonesia's economic relations are mostly focused on the United States, Japan and Europe. Stronger ties with Europe are essential so as to balance its relations with the other two countries.

"The Netherlands is our gateway to Europe. Besides its great influence in Europe, the Netherlands understand us," Seda said.

Their understanding is a result of a common history that has resulted in the penetration of Indonesian culture into the Netherlands and vise versa. Many Indonesian words have been incorporated into Dutch, like mandien, derived from mandi (bathing) and nasi goreng (fried rice).

But the younger generation in each country has less cultural bonds and emotional attachments with its counterpart in the other country.

"In a way, this is good because the relationship becomes healthier and is less emotional. What should be noted is that this (emotional attachment) should not affect investment by the Netherlands in Indonesia," Seda said.

Indeed, Dutch investment has long remained stable, even during the economic crisis which prompted some American and Japanese companies to flee the country.

Unilever, Philips, Amro Bank and Makro are only some of the Dutch investors here.

Seda, who is also chairman of the Indonesia-Netherlands Association (INA), said that the association has 120 Indonesian companies and 130 Dutch companies as members in Indonesia, and another 150 companies in the Netherlands.

Even though younger Dutch people have less emotional attachments to Indonesia, they showed great concern when the nation was rocked by the terrorist attacks on Bali two years ago. Many young people came to Bali to express their sympathy and participated in cultural activities there.

Indonesia also remains a favorite tourist destination for the Dutch. Therefore, Seda regretted the recent visa decision by the government of Indonesia, which excluded the Netherlands from the list of 21 countries that are entitled to visas on arrival.

"Hopefully, the policy is not based on emotional considerations. It should be reviewed so as to improve relations between the two countries," Seda said.